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Pirch Company owns a 90% interest in the Screen Company. Pirch sold Screen a milling machine on January 1, 20X1, for $50,000 when the book value of the machine on Pirch's books was $40,000. Pirch financed the sale with Screen signing a 3-year, 8% interest, note for the entire $50,000. The machine will be used for 10 years and depreciated using the straight-line method. The following amounts related to this transaction were located on the companies trial balances:

Interest Revenue $4,000
Interest Expense $4,000
Depreciation Expense $5,000

Based upon the information related to this transaction what will be the amounts eliminated in preparing the 20X1 consolidated financial statements?

Interest Revenue Interest Expense Depreciation Expense

a. 4,000 4,000 5,000

b. 4,000 4,000 1,000

c. 3,600 3,600 900

d. 3,600 3,600 4,500

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M976933

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